How Your Credit Report Info Affects Your Credit Score

I’m going to let you in on an awesome, little-known secret about your credit reports: There is no set value assigned to anything that pops up on your profile. What I mean is, anytime you open a new credit account, close one, have an inquiry pop up – anything like that – you won’t gain or lose a set number of points. What happens to your score depends entirely on what’s already on your credit report.

Say you’ve got a pretty generous amount of credit cards open and reporting to the credit bureaus, and you decide to open one more because what’s one more, right? The impact to your credit score will be minimal compared to what might happen if you opened a new credit card when you had no previous accounts in your credit history. The person who opened a new card and already has a lot of other plastic lining his wallet will likely see only a minimal increase to his credit score, while the person opening their first card could see a major increase.

The key point is any kind of change in your credit score depends on how your new accounts affect what’s already in there, not on the new accounts themselves. So when someone writes that a simple credit inquiry will completely negate the positive impact of increasing your credit limit, you know they may not have all their facts straight.

Hard credit inquiries – that is, the type of inquiry a creditor makes when checking your credit worthiness – only ding your score by a couple of points at the most. Obviously, they’ll add up if you get too many of them, but that’s only a danger if you’re actively applying for a lot of new credit accounts. You won’t have to worry about a hard inquiry damaging your score that badly.